Summary: Built To Sell - Creating A Business That Can Thrive Without You

Many small business owners start a business with the idea of greater freedom in mind, yet end up chaining themselves to something that takes even more dedication than a regular job.

This book discusses the dos and don'ts that business owners need to be conscious of in order to create a business that is independent of its owner(s) in order to be able to sell it. It does so in an easy to read format that's a bit of a gimmick - a fictional story illustrating the authors points. Like most business books, the core idea isn't that hard to explain. the book even includes a handy summary of the main points, which I'll paraphrase here:

Focus on one thing you can do really well; even a service business can be 'productized' by creating a standard service that is the focus of the business.

If your business revolves around one or two key clients, the risk inherent in that approach will lower the value or scare of potential buyers completely.

Put a process in place, from sales through production.

Don't "be" your company. If the company is all about you, what's a potential buyer really getting if you sell it and leave?

By focusing on products, you can charge up front rather than having poor cash flow. If you pay people to work on a project for 3 months, and don't get paid for another month, you are, by the end, out 4 months salary while waiting for the payment.

Say no to projects outside the scope of your business. Only by focusing narrowly can you really excel at what you do.

Spend time doing some research and calculations to estimate your potential market size; buyers will want to know this.

If you have a business that has sales people, hire at least two so that they'll compete with one another.

You want people who are good at selling products, not services; the latter will want to tweak your offering for each and every client, rather than selling it as-is and trying to find how it can meet the customer's needs that way, which is the best strategy for a product.

If you were previously running a more 'generic' services company, and you switch to a more productized approach, be prepared to take a hit the year when you switch.

Potential acquirers will want to see at least a couple of years of steady growth with the new model after making the switch.

If you grow, you'll need a management team that can work without you. Put an incentive system into place to reward their loyalty and results.

When looking for an adviser to sell your company, aim for one where you will not be the largest or smallest client.

If your adviser really only has one company in mind to sell yours to, they may be trying to sell you off cheap as a favor.

Consider how much you could grow with the resources of a buyer. Think big, and show them what kind of growth could happen with the right backing.

Think and speak like a product business with 'customers' rather than 'clients'.

Stock options are more complex than simpler options like bonuses that are paid out over a period of time, in terms of ways to give people an incentive to stay.

All in all, it was an enjoyable read, with solid points. Even if you have no intention of selling your business, thinking of the business itself as a sort of "product" that is not dependent on you to work correctly is a sensible way to go about creating and growing a business.

He's certainly not, nor claims to be the first one to discuss this idea, and indeed references the well known E-Myth Revisited which focuses less on selling a business, and more on how to go about extricating you and your skills from the business.

"Business plans are a waste of time" vs "failure to plan is planning to fail"

There's some valuable lesson behind all of these; I'm not saying these are bad advice. What I'm saying is that if it were so easy, more people would be doing it successfully. In reality, it's very difficult.

What are some of your favorite equal and opposite bits of business advice?

I've been running at capacity for a while now, and something went "snap" recently, so I decided to take a few days off to clear my head a bit. One of the things that came to mind is that I have too many 'side project' things.

I have had lots of fun (and a few flame wars) over the years with LangPop.com but I decided that it's another thing that should probably go, in order to simplify my life some.

It's a fairly popular site amongst programmers, as I think it's the best of the bunch in terms of guaging an admittedly tricky subject like language popularity, but there's lots of room to add to it. I've got various ideas for whoever ends up buying it!

About money: it doesn't earn a lot. Programmers, I think, are fairly blind to advertisements. In the right hands I think it could do better, but most likely, it would work best as a bit of branding/advertising for your own business, much as TIOBE's index has spread their name far and wide.

For the time being, I'll accept private bids, and depending on how well that does or doesn't go, may consider using something like Flippa.com later. Write me at davidw@dedasys.com if you're interested. I'd be happy to share some numbers and information with you. Perhaps I'll update this posting with them too.

What you get: everything! Historicaly data, code, scripts to manage it, the domain. It could use some cleaning up and love, but it does get the job done.

Running it just takes a few minutes a month, so I could hold on to it with no trouble, but I've decided that I want one less thing to think about.

Update: Some Numbers

In the last year, according to Google Analytics, the site had: 174,645 visits.

In the last month, it had 17,047 visits.

Revenue? Think of it as zero and you won't be too far off. You would have to rework things significantly to make money from ads on it, I think.

A bit more than a month ago, I had the random idea to try building and selling a web site, at the same time. The idea was that the more people bid, and requested features, the more I'd work on it.

It didn't work out. I got a bit of money out of it, but certainly not enough to cover my time at an hourly rate.

I suppose the lesson is that a month simply isn't a lot of time for something to mature: it'd probably be best to work on something on and off for a year, give it some time for traffic to build up, and so on, if the goal is to sell it.

However, in any case, I think I'm pretty convinced that my next projects, like LiberWriter, will involve for-pay products. At heart, I'm not really a business guy, so picking the simplest possible business model probably makes sense: you pay me, I give you something.

Hopefully, I'll be able to write about those in the "you win some column", but I thought I'd let people know how the experiment went.

The Kindle isn't the most beautiful device out there - it's not "beautiful", the keyboard takes away some elegance, but I'm absolutely smitten with mine. I like to read, a lot, and being able to instantly beam books to my house is just fantastic.

Kindles and other devices like them are also changing the world of publishing, going from the known world of physical books that can't be easily copied to another information good like movies or songs with something of an uncertain future.

Yet they're also opening up many possibilities: thanks to Amazon's Kindle Direct Publishing program, it just got very easy to publish books to a platform that a lot of people regularly search for good things to read. Once upon a time, "vanity publishing" was something done by those who simply wanted to see their names in print, but couldn't actually find a publisher, and thus carried some stigma.

Now, though, why not publish something you've always wanted to? Granted, without an editor, and publisher to promote your work, you probably won't become rich or famous, but many people write for the enjoyment of doing so. And who knows... there are already several cases of people publishing directly to the Kindle and making a decent income at it.

Indeed, I have several things I'm thinking of writing about that clicked when I found the Kindle publishing program. Maybe now it's time to dust off some ideas I've had and start working on them a little bit at a time.

Then, of course, my geeky side took over and I started wondering how the mechanics of it actually work.

Messily, it turns out: the preferred format for Kindle authoring is variant of HTML that's not at all what we're used to in these days of ever more potent CSS. The good side of it is that books mostly come out looking the same on the Kindle, and the end user can control how they want to visualize them. The bad side of the system utilized is that there are a lot of tips and tricks and little things to know about the whole process that can be annoying even for someone who knows HTML pretty well. For someone who just wants to write stuff and not worry about it, and who perhaps is not very familiar with HTML, the whole thing can be a huge mess and very frustrating.

Which of course looks like an interesting challenge. I set out to work on LiberWriter.com several weeks ago, and it should be ready within the next week or two. In short, it's a system that lets you concentrate on writing and, as much as possible, tries to get out of your way in order to let you concentrate on your content. It is also targeted very specifically at the Kindle (for the time being at least), so as to really focus on making things work on that platform. For instance, it can automatically generate a table of contents, a noted pain point in writing for the Kindle. I have a number of other ideas up my sleeve too, that I'm excited to work on.

I'm also definitely abandoning the "let's release it for free, for fun, and see if I can find a way to make money later" model of many past projects, and treating it like a business. I think the price I have in mind is very competitive, if you look at, for instance, conversion services that take word and spit out Kindle-specific HTML.

Anyway, have a look at the site and sign up if you're interested: as soon as it's ready, I'll email and let you know. There'll be a somewhat limited trial version so that you can play around with it and see if you like it before buying the full version.

I'm working on a project that utilizes CKeditor and need to manipulate the data it contains. Since I'm familiar with jQuery and it's fairly efficient at doing that sort of thing, rather than figuring out how CKeditor manipulates things internally, I wanted to, at least to get started, access things in jQuery. There isn't a lot of information out there on the best way to do that. Here's what I figured out - it seems to work pretty well:

Github is nice, but very, very often all the forks are the very model of a modern major paradox of choice.

Which one should I use? Which one is best? Do the forks exist because 1) the original author stopped bothering? 2) because the forkers just wanted to be 'cool' and have their own fork? 3) because the forkers don't have a clue about open source and don't attempt to submit their patches back? Who the hell knows, in most cases. This is frustrating.

I had a random idea that might help some: if the 'network' view were able to show you, at a glance, the amount of interaction between different forks: pull requests accepted and rejected.

At least we'd get an idea of what sort of community is forming around the project, and also have an idea whether the forkers and/or the authors are good open source citizens or not.

Which provides me with a very handy starting place for new Rails projects. This is a great way to get some of the housekeeping out of the way before we start: ensure we're using jQuery, add some gems that I always use like exception_notifier and will_paginate, and so on.

At $100 with a couple of bids, it doesn't look like I'll be able to retire on it! That said, I haven't spent a great deal of time on it, and part of the idea of the experiment was to limit the amount of time the 'new idea' would distract me from other things. I did hope to receive a few more "audience requests" in terms of what to build on Flippa.com, though. Hopefully, things will heat up a bit during the final two weeks of the auction, but I don't think "flipping" web sites is really a business I want to be in. It's been fun to see how much you can build with how little, though, what with all the widgets and API's out there these days.

Since I'm a coder at heart, I also released some Ruby code that utlizes Google's stock screener API: https://github.com/davidw/google-screener - it's under the Apache license, and is kind of neat to play around with, I think, and is what I use to fetch information for the site.

Book Review: Start Small, Stay Small, A Developer's Guide to Launching a Startup

I tend to be a sucker for business books, to the point where I created (and later sold) a site to discuss them. Part of the motivation for creating that site was that a lot of them tend to contain one good idea, and an inordinate amount of fluff.

This book does not - it's good material that could not easily be summarized because it's full of information. I think it's actually one of the more relevant books I've ever read in that, for my situation, the idea behind it really speaks to me.

I work as a consultant during the days, and I like it a lot. Rather than working on the same old thing year after year, I get to meet new people, new clients, new situations, and help them out, which is motivating. However, consulting has its downsides too, in that it doesn't create a great deal of long-term value. Once you've finished up a project, it's on to the next one, or no money comes in.

I'm also a bit older and more set in my ways: I did my time in the California Bay Area, and I don't relish going back and working like mad on a "Real Startup" with VC backing, crazy hours, and having the thing consume my life.

The idea behind "Start Small, Stay Small" is to find and create really niche products: stuff that will earn you some extra money as a developer, but also niches that are small enough to not really be interesting to larger companies that need a lot of income to justify a forray into a particular market segment. This, then, becomes your 'competitive advantage': Microsoft, or even 37 Signals, simply isn't going to chase after a market that is worth 20,000 dollars a year. And yet for someone working on their own, if you manage to set up something that brings in that money, and mostly automate it so that it's not a second job, it's a tidy extra bit of money. Several projects like that might even be enough to live on, depending on your lifestyle.

With that in mind, the authors, Rob Walling and Mike Taper, delve into the details of how to go about doing so. The whole thing is done under the assumption that you don't have a lot of time or money to throw at things that don't bring in concrete results in relatively short order.

Various subjects discussed in detail include how to find a niche, how to create a sales web site, how to measure market demand, conversion rates, how to productively outsource less critical portions of your business, and much more. They also discuss what sorts of numbers to look at for various aspects of the business, and anchor the discussion with real numbers for many things, rather than just giving you a hand-wavy phrase that's not that useful in the real world.

It's not a 'timeless' book as all the concrete numbers and techniques reference technologies, sites, and the market dynamics of 2011, but after all, that's part of what makes it good. Other things I didn't like so much were being sold on their for-pay "micropreneur community", and the relatively high price of the book but I think it's worth it given the real advice you get. If you don't like marketing, and think that products succeed or fail on their merits alone, of course the book will leave you cold, but of course you're wrong about that anyway!